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Mortgages
Real Estate Financing in Mexico,
Latin America and the Caribbean
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Buying Real Estate in Jamaica
Legalities and OwnershipForeigners can purchase and own real estate in
the Dominican Republic without any restrictions. A foreigner when buying a
Dominican property requires no formal approvals. All purchases made by
foreigners are to be recorded in the Title Registry Offices for statistical
purposes. A special permit is needed if a property is to be purchased in the
"maritime zone" which is a 60-meter broad strip along the entire coastline of
Dominican Republic.
When buying a property, the buyer must sign a
"Contract of Sale" with the seller, in the presence of a Notary who will
authenticate it. The Contract of Sale will contain the legal description of the
property involved, the agreed upon price and other provisos with respect to the
sale.
The other steps involved in the process of buying and registering
property in the Dominican Republic are as follows:
The buyer must make a
copy of the I.D. card ("Cédula") or passport of the seller. The buyer must then
get a non-encumbrance certificate from the Property Registry in order to ensure
that the property has no liens or any other legal encumbrances. This may be
followed by a site inspection of the property to establish its exact location.
An application must be submitted in the Tax Authority (Dirección General
de Impuestos) for the valuation of the property. It is this valuation of the
property, which is used for the calculation of the taxes. Once the inspection is
over and the value of the property has been calculated the next important task
is that the stamps and taxes must be paid at the Tax Authority.
After all
the payments have been made and all the required documents are ready, the buyer
must then apply for the registration of the property at the Property Registry.
With the implementation of the new 'Ley de Registro de la Propiedad
Inmobiliaria’, which was passed in March 2005, the Registrar must complete the
transfer within 15 days (it earlier took up to 45 days). The buyer will have to
pay a special contribution of 1% of the value of the property if it is the first
transfer and 2 % for all subsequent transfers.
Financial MattersA deposit or advance payment is normally made at the
time of signing of the “Contract of Sale”. All the procedures involved in the
process of buying and registering of real estate are tagged with an appropriate
cost. Taxes and other expenses on the conveyance of real estate hover around 5%
of the sale price.
The cost of obtaining a non-encumbrance certificate
is ROD 192.55 and the site inspection cost can vary from ROD 5,000 to ROD
12,000. Notarization of the sale purchase agreement involves an expenditure that
varies between 0.25% to1percent of the price of the property.
The tax
obligations are as follows:
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Transfer Tax: 3% of property value. |
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Tax according to Law 80-99: ROD 232 + 1.3% of property value for excess over
$ 20,000 |
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Tax according to Law 33-91: ROD 20 |
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Stamp according to Law 370: ROD 2 |
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Stamp according to Law 91: ROD 5.25 |
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Stamp according to Law 67: ROD 0.25 |
Buyers can
finance their property purchase in Dominican Republic. Commercial banks as well
as special mortgage societies offer Mortgage ("hipoteca") up to 75% of the value
of the property.
The mortgage rates in Dominican Republic are on the higher
side and range between 18% and 26%. The loan policies followed differ from
agency to agency.
Other Important IssuesNotaries in the Dominican Republic are required
to have a law degree.
In the Dominican Republic the government provides
title insurance allowing the buyer the security that he or she will actually own
the purchased property. In the event of any dispute the title insurance company
defends the buyer in the court of law and will remedy all valid claims or losses
up to the amount of the policy. Title insurance can be acquired during or after
the purchase of real estate.
In Dominican Republic, inheritance law
provides for "forced heir-ship": and the inheritance taxes range from 17% to 32%
of the appraised value of the estate, depending on the relationship between the
beneficiary and the deceased. If the beneficiary happens to reside outside the
Dominican Republic then the inheritance taxes are subject to a surcharge of 50%.
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